>> charlie: welcome to our program. tonight, what many people believe to be the number one challenge for the american economy and for president obama. the creation of new jobs. we begin with ken rogoff of harvard, and david wessel of "wall street journal." >> if you look at other recessions that followed financial crises, we're right driving down the tracks with what's happening with our unemployment. our credit markets are a mess. we have to reregulate them. consumers are overborrowed. they have to rein things in. there are a lot of things holding down job growth. >> this is a situation where most economists thought we would never find ourselves. a period of zero interest rates,

inflation falling, lots of unemployment and the federal government unable or unwilling to do more fiscal stimulus, and so i think there will be even next week when the fed meets on tuesday discussion about whether they should stop worrying so much about the exit strategy and start worrying more about whether they do an encore of more asset purchases. >> charlie: we begin with bernard schwartz, a businessman and investor and philanthropy who has thought a lot about -- and philanthropist who has thought about what the country should do to create new jobs. >> the stimulus has helped small businesses. their balance sheets are better. there is a liquidity surplus around the world. but there are two areas of america that have not done well. it is the employee in america. the homeowner of america who have been going into a deeper, deeper crisis and the infrastructure investment in modern society must make in its infrastructure. >> charlie: a program note. actress patric clarkson was

scheduled to be tonight's program to talk about her new movie, "cairo time. woots we'll have that conversation at a later >> we'll have that conversation at a later time. funding for "charlie rose" was provided by the following. ♪ >> over a century ago gottlieb daimler wrote four words tharp a promise to himself and to the world. a promise to invent the first automobile and to keep reinventing. to build the type of cars that define true performance while never sacrificing their true beauty. and to introduce innovations that help save lives and the planet. four simple words mercedes benz lives by to this day. the best, or nothing. that is what drives us.

>> additional funding provided by these funders. >> and by bloomberg. a provider of multimedia news and information services worldwide. captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> charlie: we begin this evening with jobs because job creation is the number one issue facing the american economy today in the opinion of many people, especially economists. the country lost eight million jobs following the financial crisis of 2008 causing unemployment to reach its highest levels since 1983. in february 2009, president obama signed an $862 billion stimulus package designed to stimulate growth and cushion the effects of the recession.

but unemployment continues to hover around 10% nearly two years after the crash. with the stimulus running out, there are growing concerns about what more can be done to help those that are out of work. "the new york times" reported monday that a growing number of americans have exhausted the maximum 99 weeks of federal unemployment benefits. there are also fears that job losses part of a longer trend for the u.s. economy. manufacturing jobs have continued their decades-long decline thanks to increased competition from overseas. meanwhile the government finds its hands tied by the growing deficit and declining approval ratings. president obama spoke about the challenges ahead in the remarks to the afl-o executive council meeting in washington, today. >> it took us nearly a decade to dig ourselves into the hole that we're in. it's going to take a lot longer than any of us would like to climb out of that hole and i would be lying to you if i thought that all these changes are going to be happening overnight. we've still into the some tough times ahead and your members

obviously are bearing the brunt of a lot of those tough times but here's what we're not going to do. we're not going to go back to digging the hole. we're not going to go back to the policies that took bill clinton's surplus and in eight years turned it into record deficits. we're not going back -- we're not going back to policies tasaw people working harder and harder but falling further and further behind. we're not going back to policies that gave corporate special interests free rein to write their own rules and create the greatest financial crisis in generations. we are not going back to those ideas. >> charlie: the administration has been under fire from republicans over tax cuts. president obama is poised to let expire the bush era tax cuts for the wealthiest americans next year. he would extend tax cuts for individuals making less than $200,000 a year or for families earning less tlan $250,000 a year. republicans argue the economic recovery will be jeopardized

unless all the cuts are extended. the debate has grown more heated recently. the treasury department -- the treasure department has begun a push to explain. treasury secretary timothy geithner spoke about it earlier today. >> there are some who suggest we should hold the tax cuts for the middle class hostage until congress extends the tax cuts for the top two% and permanently repeals the estate tax too. that would be a mistake in my judgment. if the middle class tax cuts are not extended americans will face a sharp increase in taxes and a sharp fall in disposable income. we can't pretend that deficits don't matter and it is encouraging today that we see more republicans expressing concern about future deficits. borrowing to finance tax cuts for the top two% would be a $700 billion fiscal mistake. it's not the prescription the economy needs right now and the economy can't afford it. >> charlie: joining me now from boston, ken rogoff. he teaches economics at harvard

and was formerly the chief economist at the international monetary fund. from washington david wessel, global economics editor at "wall street journal." i am pleased to have them here. i begin with this question i suggested earlier -- that job creation is the most important economic challenge the president faces. ken? >> well, absolutely. i mean, the unemployment rate is really unacceptably high, hovering around 10% as the president's noted and unfortunately it's not going to come down quickly, and the question is how can we grow jobs to get the unemployment rate falling again. it's a very grim picture. there are industries that are strong like the health care industry. it has jobs. industries that are weak like the auto industry. how do you make that massive switch across the american economy so that we get growth going again and get employment back up? >> charlie: how do you do that? >> well, unfortunately, there are very, limited tools at the

disposal of the government -- there are some easy things -- i think the states are not able to borrow the way that the federal government can. the local governments can't borrow the same way. certainly continuing transfers to the states and local government system so they don't have to rein in their jobs too fast, that's, i think, a no brainer. we also probably need to do at the margins things like trying to help with adult education. jobs programs for youth in the summer. but really, this is a typical post financial crisis problem and there is no magic bullet. there is no overnight cure. it's a slow healing process. >> charlie: david, are most people in the economic community, and by that i mean professors and policy makers and journalists like yourself who write books about the federal reserve and other things surprised at the extent of this high unemployment? >> yes, i think we are.

if more of us had studied history as closely as ken rogoff, maybe we wouldn't be surprised but i think very few people expected us to have a 9.5% unemployment rate today, and also that so many of those people who are out of work have been out of work for a long time. there are more than four million americans who have been out of work and looking for a job for more than a year. that's more people than live in the city of los angeles. and i think that's one of the most corrosive problems because we have every reason to suspect that some of those people are never going to be able to go back to work. >> charlie: ken, has the administration made policy choices that were wrong? >> i think on this one this was baked in the cake when they took over. i acknowledge wadavid said that it has surprised a lot of people, but if you look at other recessions that follow financial crises we're right driving down the tracks with what's happening with our unemployment. our credit markets are a mess. we have to reregulate them.

consumers are overborrowed. they have to rein things in. there are a lot of things holding down job growth. i don't think the administration's taken any conspicuous wrong step on this. we do have to decide at this point how do you trade off the risk of these unsustainable deficits against the need to try to make sure that some of the long-term employed get pulled back into the labor force. there are people who get depressed. there are health problems. psychological problems. it is a very grim problem for the united states at the moment. >> charlie: tell me how you see that, because fed chairman bernanke has spoken to it saying "we recognize the deficit is a problem" but also "in the short term we have to do something about growth." >> i think what i would say is that we need to be careful in bringing down the deficit too fast. but i wouldn't say we should expand it. we have record peace-time

deficits. our debt level is already at a level which is dangerous in peacetime. it doesn't mean we just go for austerity, we just pull the plug on everything, but i do think we have to gradually take it down and rely on the economy healing in a natural way, with easy monetary policy. i'm very in favor of very low interest rates for a long, long time. pabe even some inflation would be a good thing here. >> charlie: what other tools does bernanke have, david, in terms of monetary policy? >> he's already brought interest rates to zero and the more he talks about keeping them there for a long time the more people will be inclined to believe him and the bond market will act accordingly. really, the only big thing he could do now is to resume buying purchases of long-term bonds and mortgage-backed securities to both keep long-term interest rates low and to continue to pump credit into an economy. this is a situation where most economists thought we would never find ourselves -- a period

of zero interest rates, inflation falling, lots of unemployment and the federal government unable or unwilling to do more fiscal stimulus, and so i think there will be even next week when the fed meets on tuesday discussion about whether they should stop worrying so much about the exit strategy and start worrying more about whether they do an encore of more asset purchases. >> i think that the risk here that they're worried about is that if they go too hard buying government bonds -- i mean, if they buy government bonds enough, and pump enough money out there, we will get inflation going. it will have an effect. they're nervous about overshooting -- it's such an unusual situation, they're afraid, just like the japanese were in the same situation, that aiming for 3% inflation they end up with 30% inflation, but they've got to take that chance -- i think the fed needs to move very hard. i think that's easier to calibrate monetary policy for all its challenges than it is fiscal policy and i would add to

what david said. clearly, the credit markets aren't working and the fed does have the opportunity, the ability to do more in terms of buying things, besides plain vanilla government debt. it's done that with mortgages. i think we're going to see more of that. i would prefer to see that than overdoing it on the fiscal stimulus. >> charlie: what will we be doing to overdo it on the fiscal stimulus? creating a new stimulus bill or what? >> we probably need a new stimulus bill just to sort of decompress from the old one. it's coming off pretty fast. the question is do we have a new stimulus bill that's double as some people have recommended, or half of what we had before, and i am sort of the school to try to get it down to half of what we had and rely more on other tools. no, you shouldn't do it all at once. i imagine the state and local governments are hurting. we need to extend unemployment insurance. but you can't just go blindly with government spending. there is a lot of evidence suggesting it's limited in how

well that's going to work. >> charlie: david? >> yeah, i agree with 10. i think the problem we have is really a political one. i think there are lots of economists -- ben bernanke and probably ken rogoff among them who would love to see congress do something aggressive on fiscal stimulus now and package it with some credible, long-term deficit reduction, further steps to slow the growth of health care spending, raise the retirement age on social security, set rules on how they're going to spend annually appropriated money in the future, and that package of little more juice now and a promise of cutting spending in the future would play very well, if people believed it. the problem is the chances of that happening in washington right now are somewhere south of zero. >> charlie: there is going to be no new stimulus program in today's political environment. >> i'm not sure about that. i don't think anybody in congress is talking about doing something as big as ken is talking, but if the xecontinues to deteriorate in the next few weeks and months, i wouldn't be

surprised if congress changes its tune. already just today we saw the senate with the help of a couple republicans decide to send some money to the state and local governments -- something that had been bottled up for weeks, so if the economy deteriorates, if friday's unemployment report is bad and there is more bad news it's hard for me to believe that a bunch of people running for election are going to tell their constituents i would rather have an argument than get something done. >> charlie: what do you think the job numbers are going to look like on friday? >> i don't have any idea what the job numbers are going to look like on friday and i don't believe anybody who claims to know but i do think there are a lot of signs that the economy has lost momentum and that the second half will be less growth than in the first half and that's not very convenient at a time of such widespread unemployment. i expect, for instance, that we'll hear lots of talk from the administration over the next few weeks about not more stimulus, because that's become a dirty word, but more infrastructure. they'll talk about highways and stuff like that because those are more popular with voters

than the generic term "spending" and they'll point out that a lot of the people who have been out of work for a long time are construction workers who might actually be called back to work if there was more federal spending on those kind of infrastructure projects that they can credibly argue will pay benefits in the long run more than jucht putting somebody on some kind of relief like we've done -- >> charlie: and it is a good idea to spend money today on infrastructure. >> yeah, things that make us more productive tomorrow. we've gone through this orgy of construction a decade before the financial crisis and trying foget out of it by -- orgy of consumption a decade before the financial crisis and trying to get out of it by continuing consumption isn't going to work. there are areas like the environment that we need to deal with but certainly our roads, our bridges -- it produces jobs -- it's pretty inefficient. i'm speaking to you from boston. we had this thing called the big dig that cost $20 billion and i think you can get a little

faster between two points but hopefully, in other parts of the country, maybe it would be a little less leakage. >> charlie: why didn't the president do that? why didn't the stimulus program have more emphasis on the infrastructure from the get-go? >> it takes a long time to get these things in place, so he wanted to do things that got consumption going right away, that got demand going right away and the infrastructure takes time. you've got to plan where you're going to build the bring, and bring in the engineer, you can't just throw the construction workers at it right away so they did lay out infrastructure projects but they were coming in the second and third waves and not at the beginning. i think that's something that should be continued want mind you, in japan, they have been doing this forever -- they have these legendary bridges to nowhere because they're just building a bridge anywhere they can think of to build a bridge. we don't want to go crazy like that. >> charlie: ken, in a longer-term perspective, what worries you about the american economy? >> well, i think we have a lot

of deferred maintenance in this economy which president obama is having to deal with and to adjust toment one is income inequality. income in-- adjust to. one is income inquality. income inquality exploded. i agree with secretary geithner we need to first raise taxes on the rich before we turn to everybody else which unfortunately we will. the environment i mentioned -- that can't just go on forever -- the b.p. oil spill i think was just a little taste of things happening. infrastructure. our infrastructure is deteriorating. there are lots of areas to strengthen ourselves for the long run. i think these areas are important. on the other hand, if you go to too statist a system you have long-term unemployment forever. you have health insurance be -- without enough cost controls like david mentioned, you end up like europe and you have slower growth. we have to be careful of that

and digging our way out of this, we don't lay bombs in there that make things worse. >> charlie: is europe having an effect? the sort of sovereign-debt problem in europe having an impact on the american economy because it does not provide a market for our exports and that kind of thing? >> oh, absolutely. i mean, the shake-up in sovereign debt just roiled markets, europe is going through a pause -- the there is going down against the euro because people are more nervous about the u.s. now than europe but i do think europe is definitely a risk on the raid on the radar screen -- they have some pretty bad problems in southern europe -- greece, portugal, spain that they have not figured out and we have to hope that europe manages to keep the problem contained so it doesn't dampen imports of u.s. goods too much. >> charlie: people are more worried about the united states economy than they are about the

european economies? >> well, it's the latest news. so people thought the u.s. was out of the woods, at least the typical wall street economist, and they said europe was headed down the drain. now, europe seems to have put the plug on that. our data is getting a little worse. i wouldn't necessarily say people are more worried about the u.s., but they've turned their worries to the u.s. they thought we were fine. now they're not so sure. >> charlie: what are your worst worries? what are your greatest fears about the american economy today? >> i don't disagree with anything ken said but the one thing, i'm sure he agrees with me if we don't fix our k-12 education system, everything else doesn't matter. we have to find a way to better educate our kids so we can compete with the rest of the world, if we are going to live in an economy that is increasingly based on selling our brains and not our muscle, then we have to spend more time investing in our brains. i'm heartened by what's happened

in the last three years -- i think there is a sea change in america of people realizing that the public schools are broken and that we're beginning to fix it but we haven't found the right solution yet and i think that -- i would put that on the top five list of things we have to worry about. >> i mean, charlie, i would include that as one of the many things we need to do to invest more. we've gone, again, through this consumption binge and we need to do things to prepare to grow again in the future. if our growth goes down to european levels for a long time, it's going to put a lot of pressure on us. china is growing and growing. we need to provide a counterweight to them, you know, it's hyperbole, perhaps, but the reason the soviet union collapsed so quickly is they couldn't keep up with the growth in the united states. we need to have good economic growth over the next couple decades to be able to keep up to maintain our responsibilities in the world. >> charlie: the president said that in his west point speech, that very thing. history says that there is no nation that loses its economic

vitality and maintains its overall international standing." >> absolutely. >> charlie: so if the president comes into the oval office tomorrow and says -- >> charlie: so if the president called you into the oval office tomorrow and said "what do i do" what do you say? >> i'm sure he has 15 ideas to get the economy going again none of which could get through congress so i think the president needs to speak plainly to americans about what the game plan is here, not to pretend that everything is wonderful, which sometimes, frankly, they do. they're now moving into campaign mode and talking about how great it is that we didn't have another great depression, which is true, and they say it could have been worse, which is true, but i think that they're going to make a political mistake if they try to talk people into feeling the economy is better than it is. i think they need to lay out some game plan for getting more people to work in the short term and dealing with these long-term problems am but the long-term problems are not the problems of

2030 and 2040, the long-term problems are the problems of 2011 and 2012. what can we do to get people working, to get businesses hiring again, to get the country back moving in the right direction now that we have had the good luck, the good fortune of avoiding the calamity of a second great depression. >> charlie: what can you do to the political system so it works rather than restricts policy options. >> i think that's very difficult. there is lots of talk now about how the rules of the senate and how the members of congress -- how the congressional districts are drawn and stuff like that but i don't think the political environment is going to get much easier for president obama. we have every reason to believe he will face more republicans and they're not going to be the kind of republicans who would like to sit in a meeting room and do a mark-up and cut a deal on some tax reform. they are people who represent the angriest parts of america. the people who are most suspicious of elites because of what we have been through. so i think that one of the big

concerns are even if we had the right economic remedies, the political system seems hostile to embracing them. >> i think there was a time when paralysis was a good thing because our economy was working pretty well and they weren't meddling with it and it moved along. that's not the case now. we need to make a number of critical decisions. we can throw in how do we deal with the aging population, raging the age of social security. that's not a vote-getter but we need to do it. there are all sorts of problems that need to get dealt with that you just hang yourself politically, and i think that's what the trouble is. i think president obama, frankly, to his credit, has resisted a lot of the more populist routes he might have taken, for example on trade, i worry that as his polls stay weak and as there are more and more republicans in congress that he will take another route. i'm keeping my fingers crossed. >> charlie: what's happening in china, ken? >> well, china came through this better than most of us.

i mean, mind you, they shipped millions of workers back to the countryside. they had what to them is a recession. but by and large, they were sitting on a lot of cash. they spent it, and they were able to prop up their economy but they're living with the excesses. a lot of that money that the government pumped into the economy went into real estate. it's blown up real estate prices. there are a lot of investments that have been made that shouldn't have. and now they're realizing, "oh, my gosh, we don't want to make the same mistake the united states did, we don't want to have our own huge financial crisis by pumping up the economy." they're tightening the screws. they're trying to have a soft landing, but it's not easy. so there is definitely a risk coming out of china that it will move down faster than they're trying to do. housing prices are certainly falling sharply in the major cities in china. the chinese government recently asked the banks to do a stress

test for a 60% fall in housing prices. could you hold up with a 60% fall in housing prices -- that shows how worried they are, but they're trying to do a soft landing, they're trying to get ahead of the curve but it's very tricky in that economy. we have to hope they're successful because europe's not growing fast, we're not growing fast, we don't need china to slow down right now. >> charlie: finally, david, when you look at the caution that everybody says about what happened in japan, what does the japanese experience teach us? >> i think that's a great question, charlie. one thing it teaches me is that all those american economists who were so free with their advice about japan about how to get out of their mess made it look a lot easier than it was and we are now seeing what could happen. i think that the risk -- the big lesson is -- we learned some things from the japanese and we avoided some mistakes. we were much quicker to address

the problems of our big banks than the japanese and we had a much more aggressive monetary policy, but the problem now is what if we avoided the great depression and we have a decade of stagnation, a lost decade? what if right now we get timid and we're afraid to do the things that we need -- the federal reserve, the congress, the president, businesses, all of us to do the things that we need to get going again. japan is a warning that just because you don't have a depression doesn't mean you're going to have prosperity for a decade. >> charlie: thank you very much, ken rogoff, david wessel. coming up we'll look at one man's ideas about job creation and what might be done in terms of investing in the infrastructure. back in a moment. stay with us. >> charlie: we continue our conversation now on jobs with bernard schwartz. he is a philanthropist and an investor and former chairman in loral corporation.

he is now chairman and c.e.o. of b.l.s. investments, he recently unveiled a new initiative to create jobs for the u.s. economy. the plan is meant to reduce unemployment over several years through government spending on infrastructure. he's a long-time friend of mine and a supporter of this program. we spoke on monday and here is that conversation. so tell me what led you to spend a considerable amount of time with others thinking about unemployment and jobs in the american economy. >> about nine years ago, the american economy started into a long program of disfranchising human beings -- people from main street, workers continually lost their jobs during the eight years of the last administration and have not grown in terms of employment in the new administration.

that is a crisis by any means. it doesn't matter that businesses are doing well today, and they are doing better than they had before -- of course, the measurement is against the very bad performance of a few years past. the stimulus has helped small businesses. their balance sheets are better. there is a liquidity surplus all around the world. but there are two areas of america that have not done well. it is the employee in america. the homeowner of america who have been going into a deeper, deeper crisis and the infrastructure investment that a modern society must make in its infrastructure. >> charlie: and you characterize this as a crisis. >> it's a crisis because it's already been nine years in the running. it doesn't look, as you listen to the administration -- although they like what's happening in the economy, they also say there is no inroads in job creation. and they don't have a very, very big program for infrastructure

improvement. that is a crisis. but there is also a worldwide crisis while the united states is going through this, europe is having its problem -- >> charlie: sovereign-debt crisis. >> sovereign-debt problem, also in development, also in growth on a decline. >> charlie: the expectations of europe are much less than the united states. >> much, much less. there are drivers that are doing well but it's not big enough. china is big enough to do good in the world but even they at an 8% g.d.p. growth this year is down 30% from last year. >> charlie: you're hearing more and more caution from china. >> more and more caution upon in spite of the fact they're increasing the liquidity for investment in infrastructure at a very rapid rate. >> charlie: you have described europe and china and the coming together of some of our own issues as a perfect storm. >> yes. >> charlie: because if you look at the future of jobs for americans, they will not be there if we are depending on the same kind of worldwide demand. >> i fully agree.

>> charlie: you are arguing that we need to spend a trillion dollars. >> yes. >> charlie: of which some come from the private sector, some come from the government and you would benefit over the fact that it's a multiyear plan. all of that would make everything -- would give us jobs. but are these jobs, if you make a commitment to this kind of plan, going to be there in 201011? 2012? 2013? you cannot overnight build a high-speed railroad. you cannot overnight build an interstate highway system, a new one. >> no but it's a very complex system, we live in a very complex society, you can repair bridges, you can repair -- i read a report over the weekend that michigan and ohio are talking about putting gravel roads in -- stone gravel roads which we gave up 25 years ago because they don't have a budget to keep those things employed -- in good repair. i'm talking about a whole host of things but it's not

exclusive. i'm not suggesting to the administration that we take on the infrastructure -- solve the infrastructure in one year to the exclusion of all the other things. i'm saying it's going to take six, seven years to do the kind of thing we need in infrastructure. in six, seven years you're going to put four, seven, eight million people to work. we're not going to solve the whole problem. simultaneously, the other programs that they're talking about will go into effect -- >> charlie: you're talking about construction jobs. >> no. i'm talking about all kinds of jobs. i'm talking about construction jobs. i'm talking about internal systems that are high-grade -- bookkeeping and back-room stuff. i'm talking about all the supply stuff that goes into those -- i'm talking about restaurants. i'm talking about houses. i'm talking about a whole economy. $300 billion a year total investment is not just for

construction, it's for a multiplier effect that will improve the whole economy. >> charlie: you are a long-time supporter of democratic candidates. >> yes. >> charlie: very close to secretary clinton. formerly senator clinton. correct? >> yes. >> charlie: the obama administration, of which she's a member -- are they making the right choices? >> my argument is not with the political economic side and social side of the administration. if you look at the president's first announcement, i don't know if his priority -- of what his priorities were to be, there was education, it was infrastructure, it was -- >> charlie: climate change. >> climate change. >> charlie: health care, climate change and education. >> yeah. and infrastructure was the fourth one. i have no argument with those. those were really good choices for america. america needs attention to those issues and to some of the other issues. it is the amount of time that he

spent in health care that i thought used an inordinate amount of his political capital to get to where he should have gotten anyway, but having been there, fought that fight and won that fight, he attacked the -- several other issues for which he doesn't take any credit. important issues that they have been successful in. so my problem with this administration is that many of the problems have been resolved and looked at but the american people don't know about it. >> charlie: you basically are saying they've done the right thing but it's not known, is that your idea? >> sure. we had cap and trade. do you know where cap and trade is? >> charlie: it got lost because nobody thought it could pass. >> nobody could understand wait was either on main street. >> charlie: that's a problem with explanation -- there are a lot of people who didn't think that it was a way to go, thought a tax on carbon was a better way to go. >> i understand that. he has a program. if he could put it out in simple

ways that people in main street could understand -- >> charlie: you were saying that president barack obama is not a very good communicator and he does not explain his policies well. >> yes. >> charlie: or his options. >> yes. i do say that. >> charlie: and his priorities. >> and his priorities. everybody will listen to him and say he's a great communicator. he is a good communicator. he does communicate very high level circumstances but i don't think he articulates what needs to be done. when i speak to him about infrastructure, he says that's a very important issue for us. >> charlie: but? >> but you don't know that. the people in main street don't know that. he thinks he's going to get there eventually and he's already spent $200 billion, he thinks, which is -- >> charlie: but -- >> inadequately spent, i think. >> charlie: there is a larger point here which i think you believe. it is that the people who are advising him, in your judgment, are the people from the past -- from the previous administration and the previous administration,

and they're all deficit hawks, you believe. >> on the financial side, that's true. >> charlie: they're all deficit hawks. >> uh-huh. >> charlie: and therefore, their priorities are not your priorities. >> they are not my priorities and i cite for my priorities the fact that their system hasn't worked. it's not a new program that they're talking about. it's the same program that went back to 2002 and 2004 and the same people. we started on a bad road around 1999 which is under clinton's administration and i take full responsibility -- happy partner in that. the fact is getting rid of glass steagal was a terrible mistake for the american community. it was good for the banks. >> charlie: separated commercial from investment banks and insurance companies. >> yes, it took away the responsibility and gave the banks the opportunity to take money at very low interest rates, guarantee the government and lend it out indiscriminately. it was a bad thing -- >> charlie: we have been on a deregulation trend for a long --

since reagan. >> but it doesn't work. it has not worked in this country. >> charlie: we got too much deregulation and therefore we had to come through in 2010 with a new financial reform which looked anew at regulations. >> in 2008, the government was called together in a small -- the congress -- called together and given a 3 1/2-page document -- >> charlie: by hank pahlsson. >> by hank pahlsson, said if we don't do something by monday morning the system will crash. >> charlie: was he right? >> of course, he was not right -- of course, he was wrong. if he -- if the government -- if somebody -- the president of the united states -- had come out and said "we have a problem in this country. it's a financial problem. we're going to fix it. the federal government is going to stand behind it. i'm not going to do this in three days." the american -- look what happened in 1932, 1933 -- the president of the united states became president in march of 1933. >> charlie: franklin roosevelt.

>> franklin roosevelt. he said to the american american people on the second day, "i'm going to close the banks and i'm hopeful we will be able to reopen the banks in one week." that's what he told the american people. nothing else happened. he closed the banks. he opened the banks. people brought money back into the banks. it needs a strong fiscal political management and we don't have quite that today and we have a president that do that. i think obama can do that. >> charlie: you would have liked his priorities on assuming office which were health care, and then financial reform. to have been what? >> i would have liked to have seen job creation as the first thing. but -- but i could have lived very well with a program that he put out. if it didn't take 16 months to get there. i think the fault was that it took so long to get that

political approval. but that 16 months cost the guy on the street -- man and woman without a job, it was not an easy 16 months for him to get his political victory. so my argument was, whatever political capital he needed to do, he should have spent it in the first two or three months and get on with jobs. >> charlie: president obama, if he was sitting here would say to you, the most important thing we have achieved is not health care reform, is not even financial reform, the most important thing we do is that we saved this economy. that will be his argument. and it is -- and he will also say, we saved the automobile business. he will make those two arguments. >> i like those arguments. i happen to be -- given the choice tomorrow to vote for obama, of course i would -- >> charlie: i'm making the argument they're going to make is we saved the economy, we took emergency measures, we had to do that. >> we should have done the things that were done we had to do. >> charlie: your argument in

terms of saving the economy -- the unfinished business is creating jobs because unemployment at 9-plus percent is unacceptable. >> i don't want to fight the argument. the argument is done. we've done the things necessary. obama should get credit for some of those things, he should get discredit for things he didn't do well. what i'm trying to say is today we're in another crisis, we're in a croiss for the guy on main street that is no smaller than saving the financial structure of this country that happened under bush, we are no stronger -- the argument cannot be made any more about stimulus to the guy on the street who is not being helped and we have 19 million people like that. we can't afford to leave those people hanging until the thing turns around. >> charlie: what you want to do is see a trillion dollar commitment to infrastructure. >> multiyear. >> charlie: a multiyear plan, five or six years. >> right. >> charlie: and you believe that at the end of that six years you

will create six million jobs -- >> almost immediately that will be perpetuated for that period of time and more as it goes along because other businesses will be created to serve a new segment of the population that now has consumer dollars to spend. >> charlie: the other argument that's made which you have heard before and many times is that we face a huge deficit. >> yes. >> charlie: we cannot at this time have another stimulus of any kind. another jobs creation program of any kind. >> i don't know who makes that argument. i think we have more -- we have lots of americans but we have an america that is represented in washington and understood -- >> charlie: who do not see them calling for another stimulus problem. >> they do not, they do not. >> charlie: somebody is making that argument >> i'm making the argument. i'm not looking for a stimulus problem. i'm looking for an investment program over a period of years that is good for american business and put people back to

work. there is a limitation to how much the government can borrow. i don't know what that is. larry summers does not know what that is. geithner does not know what it is. if we asked them four years ago had we reached the limit? they would have said yes and now it is much greater than it was then. i'm a capitalist. i have all my money in the capital market. i believe in capital limitations and restraints, i believe it's better to have a surplus than a deficit, i believe that we have to make investments also and as a businessman i made investments in capital, in people, in r&d that caused some deficit at the beginning and paid off at the end. i am suggesting that we employ a very workable system -- simple system for the american society. >> charlie: and you are suggesting that if we do this, a short-term increase in the deficit. however, over the six years you

increase jobs, you will ultimately reduce the deficit, you will increase tax revenues, you will improve competitiveness. >> yes. >> charlie: national security and because of all these things the quality of life. >> yes. >> charlie: if we make this commitment. >> yes. >> charlie: so in your judgment, what stands in the way of making this commitment? >> there is a large body of thought that says -- they're deficit hawks who believe that in order to have a deficit -- an expenditure we have to have an offsetting reduction -- >> charlie: and you think that's a false choice. >> i think it's a false, unnecessary and hurtful, yes. >> charlie: and hurtful. >> and hurtful. >> charlie: when you say there are people, you must be talking about people in the administration. >> i do. >> charlie: are making that fight -- that hawks -- >> i do. almost all the people on the financial side, i think that's true. >> charlie: that's treasury and that's the economic council and that's all those -- >> i don't want to fight with those people but i think they have been wrong about this particular issue. they have not been wrong about it in 2010.

they have been wrong about it since 2002 in which the same argument has been used every year that they cannot include a deficit expenditure. of course, they can use a deficit expenditure very easily when it comes to saving the banks. they can use a deficit expenditure for an undefined stimulus program -- >> charlie: in other words, you're saying that when they saved the banks and they did those kinds of things nobody said they can't do that because it will increase the deficit. >> that's right. it's business as usual on wall street today. the two americas i talked about is washington and wall street, and wall street has not changed its theme one bit. the same people who caused the crisis in 2008 and 2009 are still there. the bankers are still there except lehpeyton manning and bear stearns. and the method -- except lehman and bear stearns.

>> charlie: and the method. >> if you measure the recovery on the fees they've recovered. >> charlie: i'm measuring the basis on the parts of the banks you are talking about nermz of -- in terms of performance. >> if you measure the performance the answer is yes. there are 19 million people out there who don't believe that. who have gotten no signs that there has been improvement. >> charlie: and it is also argued that regional banks -- you know, are not -- are not -- lending money. and -- and corporate america is sitting on money. >> yes. there is plenty of liquidity out there. >> charlie: because they're unsure about the future. >> they don't -- if you're a small businessman, look what's happening. you're making more money than you did before. you have less vulnerability than you had going forward. the product demand for you is enough to satisfy what you have on board. why should you change? they're in pretty good shape? but i'll tell you, there is a passion among capitalists --

small-business people that if you give them a program that's not one year at a time, six, seven, eight years ahead they will make their investments in people, in r&d, in plant expansion, in equipment and that's what's missing -- that's what has been missing over the last dozen years. >> charlie: you also argue that if you do this you will have a multiplier effect. >> yes. >> charlie: on every dollar spent. >> yes. >> charlie: how does that work? >> it works very simply. i open a job -- a factory. i put a hundred people there. say eat -- they eat in the local delicatessen. they buy things for home. they put their children in school. it runs historically about 1.6% for every dollar that you spend comes out 1.6% in economic activity. it's not hard to understand -- understand. it's very easy to understand. >> charlie: if you do this, five years from now, six years from now what will be the unemployment rate? >> if we only do this, the 19 million people will be reduced by six or seven million people

if we only do this, but if we do the other things that we should be doing we should be able to eliminate the 10% unemployment down to 5% which is pretty good for us. >> charlie: you're petitioning the administration to make jobs and infrastructure their new domestic priority and their new domestic agenda. >> that is exactly right. i am petitioning the president and his advisors to re-order their priorities so that job creation is the most important thing. >> charlie: in your judgment -- >> the only thing that's big enough in scale to get that many people is infrastructure. >> charlie: and duration. >> and duration. >> charlie: scale and duration. >> exactly so. >> charlie: do you think it will happen? >> i think there is a chance. i really do believe that if it does not happen or some indication by the federal government, by the president, that it's going to happen soon, i fear that the mid year

elections are going to be local elections, that is to say the bigs will not count at all, it will be local, how many jobs are created in a particular district -- >> charlie: health care, things like that. >> the democrats might lose a lot of ground and the next two years could be political and therefore economic crisis in the united states. and therefore, around the world as well. >> charlie: part of this as you have come to the conclusion that the economy per se is not going to put people back to work. it will not grow by itself. it will not grow by itself to provide the kind of employment that you think this society demands -- >> i think it will grow but too slowly -- too slowly to make a real difference to main street. >> charlie: and the president ought to say it's unacceptable in the near term to have this kind of unemployment. >> the president has to say this

is what i want, this is what we've got to do, he's got to say it in terms that they understand, not wall street, not business but the people on -- who are spending the money in the country. the terminology is too tough for them to understand. they understand foreclosure. they understand when they lose their job. or the neighbor loses his job. they understand when their kids can't get a job. they don't understand the high-falutin terms that motivate congress and motivate wall street. the president has got to go out to main street and really make his -- >> charlie: ok, so make his speech for me before we close. what would be words that will be in the language of -- >> i was left a real bad package. we are beginning to realize, or we began to realize how bad the package was. it's amazing to me, the president of the united states, it's amazing to me that the people in charge of the system

didn't even know how much a ribbon of paper was out there. it runs in the trillions. they didn't know how much toxic assets there was. it runs in the trillions. we have done some things to stop that bad slide. infrastructure -- health care was important to me. it should be important to the american people. we made available to 20-30 million people something that was not available before that couldn't have been done in the last 20-30 years. we did that. we did some other things. financial reforms. the next job, mr. american citizen, is to put you back to work, put your neighbor back to work, in american jobs and infrastructure that's going to make you feel good from the day you get up -- time you get up in the morning to the time you go to sleep at nightment it is not a hard message to sell for somebody -- sleep at night. it is not a hard message to sell for someone who wants to take a chance and it will help his political climate. >> charlie: he can say you can

hold me account for doing this. if i can't help you help this economy create a job for you then you should hold me responsible. >> i believe that's very important to the american people. and i think, by the way, this president believes that -- that he is accountable for success. >> charlie: thank you for coming. >> thank you for having me here. >> charlie: we intended to show you this evening a conversation with one of my favorite actresses, patricia clarkson, her new movie called "cairo time." we will have that conversation at a later time this week. but tonight, an excerpt before we say goodnight. so tell me about this movie. >> kaerl -- >> charlie: i said to you it proves -- >> charlie. >> charlie: i said to you it proves that a woman can love two men. >> the heart can split. i believed it all along and now i'm in a movie and because it's in a movie, it's true. >> charlie: you can have an emotional attachment to two men at the same time in different relationships and to have one -- it's not a zero-sum game.

to have one does not mean that the other is not great and wonderful and satisfying. >> no. that's the beauty of this, charlie -- this is a very -- this is a happily married woman. this is not a woman whose husband has walked out on her, been abusive in any way, it's a very strong marriage, she has a little bit of empty-nest syndrome, children who have finally left the house. she has a wonderful job. >> charlie: she's got it together. >> she's got it all together and then she suddenly is a stranger in a strange land in cairo, this beautiful man inside and out comes to sort of rescue her -- her husband's -- >> charlie: delayed. >> is -- my husband is delayed in gaza, he works for the u.n. and his former kind of security detail driver comes to take me around -- it's -- you know, the beauty the serendipitous, unexpected nature of love and it's -- you know, ruben had the courage to make a film that

really is very unwestern. there is no immediate gratification in this film as you know. it's -- its own time. >> charlie: it doesn't run off. >> no. i wish. but i think you know, it -- and it -- it evokes such emotion from -- it evokes such emotion from people -- the quiet -- the timbre of this film is so soft and subtle. having been with it for so long, we have been to many festivals, we just had the premiere, the reaction to it has been so strong, the things people said to me about this film, charlie, these two brilliant new york playwrights, i'm lucky enough to be friends with them, one believes the movie is about the tragedy of restraint and the other feels that it's about the

triumph of restraint. i said, "ok, boys." >> charlie: what do you think it is? both? >> i think it's whatever -- i think it's how you take the journey. i think to each his own and i'm -- i don't know. i have no objectivity about it anymore. it was such a personal, deep exploration, this character -- it's one of the most difficult characters i have ever played. ♪

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